Saipem and Subsea7 announce merger to create global energy services leader

Saipem and Subsea7 have reached an agreement in principle to merge, forming a dominant force in global energy services. The merger, formalized through a proposed merger agreement, will combine the strengths of both companies to create Saipem7, a new entity with an extensive backlog, a diversified service portfolio, and expanded offshore engineering capabilities.

The deal is expected to bring together Saipem’s expertise in offshore and onshore engineering with Subsea7’s leadership in subsea services, creating a company with an estimated €43 billion backlog, projected annual revenue of approximately €20 billion, and an EBITDA exceeding €2 billion. The combined vessel fleet will enhance operational efficiency, enabling the company to take on complex, large-scale offshore projects.

The terms of the agreement state that shareholders of both Saipem and Subsea7 will each own 50% of the merged entity. Subsea7 shareholders will receive 6.688 Saipem shares per Subsea7 share held and will receive an extraordinary dividend of €450 million prior to completion. The merger is expected to generate €300 million in annual synergies within three years, with an estimated one-time integration cost of €270 million.

How Will the Saipem-Subsea7 Merger Reshape the Energy Services Industry?

The creation of Saipem7 is expected to redefine the energy services sector by expanding the company’s reach across offshore, onshore, and subsea markets. The merger strengthens its ability to provide end-to-end offshore engineering solutions, offering clients a broad range of services, including subsea installation, pipeline construction, and offshore drilling.

The merged company’s enhanced technological capabilities will improve efficiency in offshore engineering solutions, positioning it as a leader in delivering complex projects for the oil, gas, and renewable energy industries. The combined vessel fleet will allow Saipem7 to take on larger projects while improving project execution and cost efficiency.

Industry analysts suggest that this merger will enable Saipem7 to compete more effectively against rivals such as TechnipFMC and McDermott International, particularly as the demand for subsea engineering and offshore wind projects increases. By consolidating operations, the company aims to strengthen its financial position while ensuring a more efficient capital investment strategy.

What Are the Strategic Benefits of the Saipem and Subsea7 Merger?

The proposed merger agreement is expected to create significant advantages for both clients and shareholders. The combined vessel fleet will allow the company to deliver offshore engineering solutions at a greater scale, improving project timelines and execution efficiency. The merger also aligns with the energy sector’s transition toward carbon capture, decommissioning, and offshore renewables, areas where Saipem7 will have a strong competitive advantage.

The deal will provide a more efficient capital investment programme, ensuring optimized spending on high-value projects. Post-completion, Saipem7 is expected to pay out at least 40% of free cash flow in dividends after lease liabilities are repaid, making it an attractive proposition for investors. Additionally, the expanded workforce of over 45,000 employees, including 9,000 engineers and project managers, will reinforce the company’s ability to execute large-scale projects efficiently.

Who Will Lead Saipem7, and How Will It Be Structured?

Saipem7’s headquarters will be located in Milan, with shares listed on both the Milan and Oslo stock exchanges. As part of the merger agreement, Siem Industries, the largest shareholder of Subsea7, will appoint the Chairman of Saipem7, while CDP Equity and Eni will designate the CEO. It is currently anticipated that Alessandro Puliti will serve as the CEO of Saipem7, while John Evans will lead the company’s offshore business division.

The new entity will be structured into four core business units: Offshore Engineering & Construction, Onshore Engineering & Construction, Sustainable Infrastructures, and Offshore Drilling. The Offshore Engineering & Construction division will be incorporated as an operationally autonomous entity under the Subsea7 brand, with headquarters in London. This division will represent approximately 83% of the combined group’s EBITDA and will include all of Subsea7’s existing operations and Saipem’s offshore engineering activities.

The Onshore Engineering & Construction business will focus on optimizing risk and profitability, while the Sustainable Infrastructures division aims to expand beyond the Italian market. The Offshore Drilling segment will continue to maximize its EBITDA and cash flow, ensuring stable revenue generation for the company.

What Are the Financial and Shareholder Implications of the Merger?

The merger agreement includes provisions for shareholder distributions. In 2025, both Saipem and Subsea7 will be permitted to distribute up to $350 million in dividends each. If the merger is delayed beyond early 2026, both companies may distribute at least $300 million in dividends before finalisation.

Once the merger is complete, Saipem7 will adopt a shareholder-friendly dividend policy, with at least 40% of free cash flow being returned to investors after lease obligations. This policy is expected to enhance investor confidence while supporting the company’s long-term financial stability.

What Regulatory Approvals Are Required for the Saipem-Subsea7 Merger?

The completion of the proposed merger agreement is subject to regulatory approvals and shareholder consent. Both companies must receive clearance from the Italian government and relevant regulatory bodies. Additionally, Saipem shareholders must approve the deal with a whitewash majority vote to secure an exemption from mandatory takeover bid rules.

Saipem and Subsea7 have agreed to exclusive negotiations and have undertaken mutual obligations to prevent engagement with competing offers. The binding merger agreement is expected to be signed by mid-2025, with completion anticipated in the second half of 2026. However, the agreement allows for termination rights if either party uncovers significant issues during the confirmatory due diligence process.

How Will the Saipem7 Merger Impact the Future of Offshore Engineering?

The merger between Saipem and Subsea7 signals a strategic shift in offshore energy services, creating a company with unparalleled expertise in offshore engineering solutions. With the energy industry evolving toward renewables, carbon capture, and decommissioning, Saipem7 is expected to play a crucial role in delivering innovative offshore engineering projects.

By consolidating two major industry players, the merger will enable Saipem7 to expand its global reach, improve cost efficiency, and enhance project execution capabilities. As demand for offshore wind projects and subsea installations increases, Saipem7 will be well-positioned to lead the industry through technological advancements and operational excellence.

The Saipem-Subsea7 merger marks a significant transformation in the offshore energy sector, creating an entity with a €43 billion backlog, €20 billion in revenue, and a diversified portfolio of services. If approved, Saipem7 will emerge as a global leader in offshore engineering solutions, offering end-to-end services for the oil, gas, and renewable energy industries.

The transaction remains subject to shareholder approval and regulatory clearances, but if finalized, Saipem7 will be positioned as a dominant force in offshore engineering, driving technological innovation, efficiency, and long-term growth.